Wells claws back $75 million more from ex-execs

Wells claws back $75 million more from ex-execs

Wells claws back $75 million more from ex-execs

Wells Fargo announced Monday it was taking back $75 million from former CEO John Stumpf and ex-community bank unit head Carrie Tolstedt because of the bank's cross-selling practices that resulted in 2 million fake accounts being created.

Late previous year, Wells Fargo was fined $185 million for a fake account scandal, where more than 5,000 of the bank's former employees opened more than 2 million fake accounts to get sales bonuses.

On Monday, the board said it would claw back an addition $47 million from Tolstedt and $28 million from Stumpf.

In its report, the board said as of last Friday, it chose to claw back from Mr. Stumpf an additional $28 million of incentive compensation paid in March 2016 under an equity grant made in 2013.

The scandal has cost the CEO, John Stumpf (and Warren Buffett's favourite banker) his job and millions of dollars in benefits, other senior executives lost retirement benefits and options, and others were censured.

But still, not everyone is convinced this is enough.

Institutional Shareholder Services, which advises big investment firms on corporate governance issues, recommended Friday that shareholders vote against the election of 12 of the bank's 15 board members, including Sanger, at the bank's upcoming annual meeting. It argued that the inaction of board committees contributed to the $185 million settlement and $110 legal settlement being so high, and "untold reputational harm at the bank".

But the boards investigation points the finger at top management for the problem.

The report criticized the board for not centralizing the risk functions at the bank earlier, not requesting more detailed reports from management and not insisting Stumpf get rid of Tolstedt sooner.

Lawyers for Ms Tolstedt, who declined to be interviewed for the investigation, rejected the report's findings.

The bank's corporate structure gave too much power to the community bank's senior leadership, who the report concluded were "unwilling to change the sales model or even recognize it as the root cause of the problem".

For example, she conducted multiple daily phone calls to discuss sales reports, launched "rally" days to motivate employees and held "morning huddles" to discuss the prior day's sales reports.

"This exhaustive investigation identified serious issues related to Wells Fargo's decentralized structure and the sales culture of the Community Bank, all of which the Board and management have been working diligently to rectify", Chairman of the Board Stephen Sanger said in a statement, noting that building trust of customers is paramount to the bank.

Wells Fargo is still reeling from the disclosure past year that it opened up to 2.1 million customer accounts without their permission.

It wasn't until Wells Fargo settled with federal regulators on September 8 that the board learned 5,300 people had been fired from 2011 through March of previous year, according to the report.

Independent members of the banks' board launched an investigation.

Former Wells Fargo employees who tried to raise red flags about the sales practices have told NPR's Chris Arnold that they were fired or pushed to resign - and an investigation showed that the bank had put black marks against those employees' names in a permanent national database used by banks and regulators. "Stumpf was by nature an optimistic executive who refused to believe that the sales model was seriously impaired", according to the report. The lawyers drew on interviews with hundreds of employees, examined information on at least 1,000 firings and sifted more than 35 million documents, including thousands flagged by the bank in its own review.

Managers within the community bank exerted "significant and, in some cases, extreme pressure on employees to meet or exceed their goals", sometimes calling subordinates several times a day to check on sales, the report said. Federal prosecutors are considering criminal or civil charges against the company, the Labor Department is investigating whether it illegally fired employees who reported the wrongdoing, and several cities and states, including California, have stopped doing business with the bank for now.

"I am very proud of what our team has accomplished.in terms of progress that has been made", Sloan said in conference call with reporters.

Recommended News

  • Ex-Patriots player Aaron Hernandez found dead in prison cell

    His death is being investigated by the state police and the Department of Correction. Hernandez hanged himself utilizing a bed sheet that he attached to his cell window.

    Massive U.S. bomb death toll rises to 94

    But former President Hamid Karzai accused the United States of using Afghanistan as "a testing ground for new and risky weapons". A year ago massive B-52 bombers operating out of Qatar flew at least two missions in Afghanistan for the first time since 2006.
    FCC votes to allow some broadcasters to buy more TV stations

    FCC votes to allow some broadcasters to buy more TV stations

    Democratic FCC Commissioner Mignon Clyburn said the ruling "opens the door to immediate price hikes" to small businesses. First adopted in 1985, it has allowed media companies to count only half the coverage area reach of their UHF stations.
  • United Airlines can't say if video has hit sales

    Now, the airline's CEO says no employees will be fired over the incident. " The buck stops here ". But he said the company had not considered sacking anybody over it.

    Pacers playoff picture still unclear

    In regard to improving this Brooklyn team, Atkinson emphasized, "I'm so focused on how we can get the guys on our roster better ". At one point, Brooklyn was down by 21 points, as the Nets trailed the Bulls 43-22 with five minutes left in the first half.
    Oilers' McDavid on Game 4

    Oilers' McDavid on Game 4

    San Jose scored again on the power play, which was overdue after going converting only once in 14 tries in the first three games. Meanwhile, the cyclical nature of sport has finally brought dawn to Edmonton, where Connor McDavid is 20 and Leon Draisaitl 21.
  • Leishman and Smith five back at RBC Heritage

    Leishman and Smith five back at RBC Heritage

    Competing for his first PGA Tour win at the tricky Pete Dye layout proved too daunting for the inexperienced Schniederjans. DeLaet was second after a 69, his third straight sub-70 round after having just five in five previous appearances here.
    Former Patriots Tight End Aaron Hernandez Found Dead in Prison Cell

    Former Patriots Tight End Aaron Hernandez Found Dead in Prison Cell

    Hernandez was transported to the UMass Leominster hospital and was pronounced dead at 4:07 am, according to the statement. Lloyd's mother, Ursula Ward, believes that Hernandez's suicide was "another form of justice", according to WCVB 5 .

    Reid back but Carroll out as West Ham prepare for Everton visit

    But now I don't think about that, I think about Everton and Everton only". Bilic denied the striker's absence was because of a bust-up.
  • IMF's Warning on US Debt

    IMF's Warning on US Debt

    Developing nations were predicted to expand at a 4.5% rate this year and 4.8% in 2018, a marked improvement from 4.1 percent growth in 2016.
    Theresa May and EU's Antonio Tajani discuss red lines for Brexit

    Theresa May and EU's Antonio Tajani discuss red lines for Brexit

    Hungary's foreign minister says a free-trade agreement between the European Union and Britain should be part of Britain's EU exit. The European Parliament will have to approve any deal agreed between Britain and the 27-member EU.

    Global Collagenase Market 2017 - Nordmark Arzneimittel, Worthington Biochemical, Roche, Thermofisher, Qiaoyuan

    In addition, the overall market potential is further described in the report along with different countries around the globe. The Phenoxy Resins Pellet report covers the analysis of traditional as well as the emerging markets.

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.